Correlation Between CG Hi and Daehan Steel
Can any of the company-specific risk be diversified away by investing in both CG Hi and Daehan Steel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CG Hi and Daehan Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CG Hi Tech and Daehan Steel, you can compare the effects of market volatilities on CG Hi and Daehan Steel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CG Hi with a short position of Daehan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CG Hi and Daehan Steel.
Diversification Opportunities for CG Hi and Daehan Steel
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 264660 and Daehan is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding CG Hi Tech and Daehan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Steel and CG Hi is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CG Hi Tech are associated (or correlated) with Daehan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Steel has no effect on the direction of CG Hi i.e., CG Hi and Daehan Steel go up and down completely randomly.
Pair Corralation between CG Hi and Daehan Steel
Assuming the 90 days trading horizon CG Hi Tech is expected to under-perform the Daehan Steel. But the stock apears to be less risky and, when comparing its historical volatility, CG Hi Tech is 1.05 times less risky than Daehan Steel. The stock trades about -0.4 of its potential returns per unit of risk. The Daehan Steel is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,333,000 in Daehan Steel on September 1, 2024 and sell it today you would earn a total of 218,000 from holding Daehan Steel or generate 16.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CG Hi Tech vs. Daehan Steel
Performance |
| Timeline |
| CG Hi Tech |
| Daehan Steel |
CG Hi and Daehan Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CG Hi and Daehan Steel
The main advantage of trading using opposite CG Hi and Daehan Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CG Hi position performs unexpectedly, Daehan Steel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Daehan Steel will offset losses from the drop in Daehan Steel's long position.The idea behind CG Hi Tech and Daehan Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Daehan Steel vs. Nice Information Telecommunication | Daehan Steel vs. Wireless Power Amplifier | Daehan Steel vs. Nable Communications | Daehan Steel vs. CG Hi Tech |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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